Copper Erases Tariff Selloff as Shanghai Stockpiles Hit Three-Year Low

Copper prices climbed for a sixth straight session on Tuesday as buyers in China accelerated purchases ahead of consecutive public holidays and onshore inventories fell sharply. The London Metal Exchange three-month contract rose to $14,783 a tonne, leaving the metal just under its September record, while Comex December copper traded near its September peak in New York. The price advance contrasts with a sharp drop two weeks earlier after a Reuters report that a U.S. copper tariff plan had stalled; this rebound appears driven primarily by tight physical availability in China rather than policy developments in Washington. Shanghai cathode inventories fell to 43,900 tonnes last week — a level not seen since 2023 — and SHFE warehouse holdings have plunged about 70% since early June, according to SMM. Spot cathode premiums in Shanghai jumped as well, indicating urgent demand for immediate delivery. London market signals point to the same squeeze: cash copper moved into a premium relative to the three-month contract, reversing a discount from the prior week, and cancelled warrants — metal designated for withdrawal — rose to 122,150 tonnes, nearly half of on-warrant stock. By contrast, Comex warehouses in the U.S. still hold roughly 696,000 tonnes, about 69% of exchange-monitored copper, following a year in which importers stocked up ahead of potential tariffs. Supply-side concerns could add further pressure. Sprott Asset Management warned of a possible drop in mined output this year for the first time since 2017, citing outages at major operations including Grasberg in Indonesia and Kamoa-Kakula in the Democratic Republic of Congo. Chile’s Escondida, the world’s largest copper mine, is also facing labor negotiations that could affect output. Analysts and strategists are divided on how much higher prices can go, noting both the physical tightness supporting the rally and risks from profit-taking or broader market corrections. The market is watching several near-term catalysts: seasonal restocking in China ahead of the Mid-Autumn and National Day holidays, the outcome of labor talks at major mines, and a high-profile meeting between President Trump and President Xi that traders hope will clarify trade prospects. Until Chinese factories resume normal activity after the holidays, inventory and delivery dynamics are likely to remain central to price direction.